GENERAL WAGE INCREASE GRANTED

Press, Volume XCVIII, Issue 29004, 19 September 1959, Page 12

GENERAL WAGE INCREASE GRANTED

Maximum Of 15/7: Limit Unchanged

Wage increases up to a maximum of 15s 7d a week for adult males, Ils 9d for women, and 9s for junior workers are*provided for by the general wage order issued yesterday by the Court of Arbitration. The increases will be payable from October 12. The Court, by a majority order and with the employers’ representative dissenting, has substituted an increase of 24 per cent, on wage rates up to £l3 a week for adult males, to £9 15s for adult females, and to £7 10s for junior workers (under 21) for the 18 per cent, increase up to the same limits that has applied since the general order of 1956. Of the application for the incorporation of general increases in award wage rates, the Court says the economy as a whole can carry the estimated cost, but a difficulty is that most of the cost will be concentrated on a small group of industries. It has made a pronouncement on the matter, but delayed a declaration of the principles that will be observed in individual applications.

The order applies to all salaries or wages, including time and piece wages, overtime and bonus and other special payments, allowances, fees, commissions, and every other emolument, whether in one sum or several, and to travelling expenses. Excluded are allowances for tools, bicycles, motor-vehicles, protective clothing, or special footwear. The application for the general increase was made by the Federation of Labour, through the Wellington Clerical Workers’ Union, and was for a 34 per cent, increase to be substituted for the 18 per cent., with the limit to be raised to £2O a week.

The order lists some awards which require adult female vvorkers to be paid in the same manner as adult males; and another clause lists awards and industrial agreements excluded from the new order. The list occupies five foolscap pages and includes many local body industrial agreements. Of the evidence by the Government Statistician (Mr J. V. T. Baker) that granting of the application in full would increase the salary and wage payments by £76m, the Court comments in its memorandum that this would be almost equivalent to the value of the 1958-59 wool clip. 30 pei cent, of the value of ail exports for 1958, and about 8 per cent, ol the national income for 1958-59. Summarised, the main conclusions of the Court are:— Since the second quarter of 1955 the consumers’ price index has risen by 14.1 per cent.; since the 1956 general order by 8.9 per cent. Of the latter increase, increases in wages have been responsible for only 2.8 per cent., while the additional indirect taxation imposed by the Budget last year was responsible for 3.8 per cent Other factors contributed the balance of 2.3 per cent.

“Marked Recovery” Economic conditions affecting finance, trade, and industry in New Zealand were not satisfactory in 1958. but during the current year there has been a marked recovery in the prices of wool and dairy produce, and immediate prospects are encouraging. New Zealand’s total export income has remained virtually static during the last four financial years, in spite of appreciable increases in the population and labour force. In the last 12 months there has been a notable improvement in the terms of trade, which deteriorated seriously between 1956 and 1958. “During 1958 the overseas reserves fell to a precariously lowlevel. and while remedial measures have resulted in a degree of replenishment, we do not think they can yet be regarded as entirely satisfactory.” the memorandum continues. The volume of production m primary industries has continued to expand, but the value of production there dropped in 1957-58. Both volume and value of production in secondary »industries show progressive growth. Shares Of Income Though, the share of total private income received by salary and wage earners has reached its highest level since the end of World War 11, the share received by the group including professional occupations, commerce trade, business and farming has fallen progressively since 1952-53. and is now at a percentage lower than that of 1938-39. In spite of the recession, the Court finds that since the making of the 1956 general order, actual rates of wages paid in industry have increased at a greater rate than the minimum rates used in compiling the nominal weekly wage index.

The latest index number of nominal minimum weekly rates of wages in awards and industrial agreements has increased by 8.6 per cent., since the second quarter of 1955, and 2 per cent, since the 1956 general order, compared with the consumers’ price index increases of 14.1 per cent, and 8.9 per cent, for the same periods. The making of a general order in the full terms of the application would not promote the economic stability of New Zealand, and would consequently be inconsistent with the general purpose of the Economic Stabilisation Act, 1948,” the conclusions say.

Legislative Action Examining the increase in the consumers’ price index, the Court say: “Unfortunately, the Court is faced again with a recent drastic increase in the index as the result of legislative action, the permanency of which appears to be a matter of political moment and a subject of considerable speculation.” , After examining retail prices and wage rates, the Court says it is clear that in the last 12 months for which statistics are available retail prices have increased at a much faster rate than minimum wage rates. Even excluding the effect on the price index of. the indirect taxation in the 1958 Budget, in the last year it rose by 2.8 per cent, while the nominal wage index increased by only .6 per cent. “It is inescapable that apart altogether from the effects of changes in direct taxation .there has been, in general, an appreciable falling off in the purchasing power of wages of workers employed at the minimum rates prescribed by awards and industrial agreements.’’ the Court continues. "The Court examines economic conditions and the volume of primary and secondary production, and then deals with relative movements in income. “Lagged Far Behind” “It is indisputable that since the last general order, changes in minimum rates of wages have lagged far behind the changes in the consumers’ price index,” it says. “Not only has the takehome pay of many workers been reduced by direct taxation, but the purchasing power of that takehome pay has fallen appreciably. During the last six months, through force of circumstances, a wage freeze so far as minimum rates are concerned has operated for all practical purposes. Nevertheless, the price index has continued to rise.

'We think that a prima facie case has been established- for a general order, provided the economy has the capacity to meet and sustain it.” The export prospects, except in the case of lamb, had become still brighter in the last two months, and the terms of trade must have improved considerably since the first quarter of the year. The evidence of the Governor of the Reserve Bank (Mr E. C. Fussell) and the Secretary of the Treasury (Mr E. L. Greensmith) did not support contentions that no general order- should be made. “Extremely Difficult” “The issue is extremely difficult and controversial, ’ the Court continues. “After most careful consideration, a majority of the Court has reached the conclusion that an order should be made. “The state of the economy still demands a cautious approach. In the general interest, the Legislature has taken action which has had the effect of reducing the standard of living. We do not think the situation justifies an attempt by the Court to restore the previous standard of living enjoyed by workers, much less any attempt to improve On that former standard. ’ The Court appreciated that it could not increase wages without some effect on the purchasing power of superannuitants, pensioners, and persons on fixed incomes; but could not accept that as a conclusive reason that no general orders should be made, it says. The decision is then given, and the Court draws attention to the fact that under the regulations it is .in a position to consider an application for a further general order increasing or reducing rates after six months from the operation of the order. *